In an article by Landon Thomas of the New York Times News Service, one of the most well known names in the bond trading business is not having a good year. Bill Gross has had a rough 2018 – on his personal life he was divorced and on the bond markets he is losing money.

Mr. Gross is worth over $2 billion and made his money on a fund called Pacific Investment Management Co or Pimco. At it height, the Total Return fund had over $292 billion in assets and was the largest fund of its kind. Pimco popularized a bond fund for individual investors, a shift from the bias of institutional money.

Mr. Gross left Pimco in 2014, set up shop in a competing company called Janus and now runs the Henderson Global Unconstrained Bond Fund. Its assets are over $2 billion with a substantial portion of Mr. Gross’ personal money in the fund. The old fund over the past 3 years is up 10%, the new fund is up 1%.

At the end of May, Mr. Gross’ fund dropped 3% in one day because he believed interest rates on German and US bonds would rise, however the political situation in Italy had prompted investors to seek safety in those bonds, increasing their prices and pushing down their yields.

Bond funds are not supposed to lose 3% in one day or 6% in a half of a year. Generally bond bunds are supposed to be safer and more stable on prices than stock funds. Mr. Gross besides investing in government and corporate bonds, also uses derivatives and other complex financial instruments that if the markets remain calm help improve the performance of the fund.

Linking to dividend paying stocks, when someone is successful, it is natural and expected that the person is listened more than the average person. It does not mean everything they do will be successful, but people are expecting more than normal. If you read the marketing from the fund companies, they point to someone’s being more successful than the norm and that is why you may want to learn what they do and do not do. If you invest in dividend paying stocks – the easy question is how safe is the dividend? and will it be paid every year? from those questions will lead to others.

There are more questions than answers, till the next time – to raising questions.